"We expect Ford to give some compensation to dealers," Vinkesh Gulati, president of the Federation of Automobile Dealers Associations, told Bloomberg TV in September.Ī Ford India spokesman says the restructuring "follows a detailed examination of India business and potential options in the wake of changing economic and regulatory environments." That decision will cost the company $2 billion in restructuring charges and may entangle it in lengthy legal fights with local dealerships, which stand to become liable for providing after-sales services once the manufacturer leaves. Toyota Motor Corp has ruled out any expansion here, and motorcycle maker Harley-Davidson Inc gave up last year.įord Motor Co is also winding down its operations in the country. Consumers favor cheap, compact cars such as those made by Hyundai Motor India Ltd and Maruti Suzuki India Ltd, and the two companies control 60% of the market. Global automakers face a particular struggle to gain traction in the country.
It took years of fighting in arbitration courts by businesses, including oil and gas explorer Cairn Energy Plc and Vodafone Group Plc, before Delhi eventually rescinded the rule.
Until August this year, a controversial law allowed the Centre to retrospectively levy capital gains tax on foreign businesses for the indirect transfer of their Indian assets. "Most global manufacturers have found it hard to tap the market and go in a big, significant way." "India still is a difficult place to manufacture from," says Richard Rossow, a former deputy director at the US-India Business Council and now Wadhwani chair in US-India policy studies at the Center for Strategic and International Studies in Washington. But they've been stymied by high tariffs, strict labor rules, a challenging legal system, and other hurdles. International companies have been trying to reach the growing middle class in this nation of 1.4 billion ever since its economic liberalization in the 1990s. India has curbed new Chinese investment since April of that year, and a number of deadly clashes along the two nations' disputed border in the weeks that followed have eroded relations further.Įven as foreign investment in India increases rapidly, GM's $1.1 billion in losses, followed by the political and legal issues keeping it from selling its business, is a stark warning to foreign investors. GM's sale of the factory complex to China's Great Wall Motor Co is also in limbo, despite a deal signed in January 2020. Only a moldy layoff notice pinned outside the mothballed factory hints at the difficulties GM now faces in disentangling itself from the country.įour years after ceasing sales in India and more than a year since its final car for export rolled off the production line, the carmaker remains mired in legal challenges from the labor union that represents more than 1,000 former workers that the company let go from the plant, effectively barring its exit. Flanked by green hills flecked with yellow and orange wildflowers, General Motors Co's 300-acre plant in the town of Talegaon in western India stands largely idle, as it has for most of the past year.